Profit woe on the buses for transport group

The group, which earlier this year tapped investors for £615m and cancelled its dividend, said a number of its local bus markets face continued “challenging economic conditions”.

Aberdeen-based First grew underlying pre-tax profits by 43.7 per cent to £28.3m in the six months to the end of September. However, after exceptional items, the group slumped to an £8m loss.

Revenues in its UK bus arm, which serves cities including Sheffield, Plymouth, Bristol and Glasgow, fell 14 per cent to £490.7m after it sold its London bus business. Operating profits fell 18 per cent to £17.3m as higher fuel costs and the absence of last year’s Olympic Games weighed on the business.

But bus passenger revenues edged up 1.7 per cent on a like-for-like basis and First said it saw underlying growth in passenger volumes of 0.7 per cent – the first rise since 2008 – including an increase of nearly five per cent in the North.

First is trying to boost passenger numbers by tailoring fares and networks to local market conditions – including cutting some fares by up to 25 per cent in York – but said this will be an “ongoing process”. It is battling tough markets in cities such as Glasgow.

First, which operates the Capital Connect, Great Western, ScotRail, TransPennine Express and Hull Trains routes, said underlying rail passenger volumes rose by 3.6 per cent, with like-for-like passenger revenues rising by 5.7 per cent.

It is bidding to take over franchises including Essex Thameside and plans to apply to run the East Coast Mainline.

First has been battered by the tough economy, shrinking Government support for public transport and delays in rail re-franchising.

Chief executive Tim O’Toole said the foundations had been built for its turnaround.

He said: “Although it is early days in our multi-year plan to improve our returns, resilience and growth prospects, we are seeing clear indications that we are making progress.”

He added: “While there remains a significant amount to be done, we believe the foundations are now in place to deliver on our market-leading potential.”

Revenues edged up 1.6 per cent to £3.3bn and First’s debt mountain fell by 30.5 per cent to £1.45bn.

First said, depending on its performance, it may pay a final dividend for the year to the end of March.

It said its US Greyhound bus division continues to struggle, while recovery in its US student bus division is on track.

In South Yorkshire, First Group recorded a five per cent passenger volume increase in the half year, compared with 0.7 per cent nationally.

A First Group spokesman said: “Sheffield itself was up 8.5 per cent.”

The spokesman highlighted the success of the Sheffield Bus Partnership, which includes Sheffield City Council, South Yorkshire Passenger Transport Executive, Sheffield Community Transport and the city’s main bus operators, First South Yorkshire and Stagecoach.

The partnership aims to improve the quality of bus services in Sheffield by providing simpler bus networks, coordinated timetables, and a new range of tickets which can be used on buses or trams.

The spokesman said that, since its launch in October 2012, the partnership has reduced congestion and duplication on key bus routes.

According to the spokesman, it has also resulted in 14 per cent more adult fare paying passengers travelling on Sheffield’s buses since this time last year.

The spokesman added: “The strength of this partnership has created a virtuous circle. Additional Department for Transport funding has been secured as a result of it, which we feel underlines the Government’s belief that this is the way forward for better bus services.”

Commenting on the UK bus business, First Group said in its results statement: “Our £76m order for 464 new buses to be delivered during the current financial year is on track and helping to reduce maintenance expense. As an example of this investment, and to drive growth, we rebranded a key route in Portsmouth in conjunction with our partners Hampshire County Council and Portsmouth City Council.

“We also continue to roll out environmentally friendly hybrid buses, including a growing route between Chelmsford and Lakeside shopping centre and also on routes to Heathrow Airport where we leveraged funding both from the airport operator and the Department for Transport.

“Meanwhile, we are introducing electric buses to our park and ride contract in York in partnership with the local authority and Department for Transport. We work with stakeholders, including disability groups such as the Royal National Institute of Blind People, to improve our fleet and also to support our driver training programme.”